Financially prudent individuals develop financial plans that help them achieve their financial goals. Traditionally, many of these individuals have entrusted their financial plans to personal financial advisors.
More recently, however, some individuals have increasingly relied upon computer-based systems that organize their financial assets and liabilities and further provide them with a summary of their financial health. However, these systems tend to focus on the administrative aspects of financial planning without enabling the user to make reasoned choices about their financial futures. Furthermore, these systems are limited by their inability to dynamically analyze the financial goals. These limitations are counterproductive to the user's needs to develop and manage an integrated personal financial plan from an executive decision-making perspective.
Many existing financial management systems allow users to electronically organize their financial assets and liabilities. These systems typically focus on presenting the user with a summary of their financial transactions over a given period of time and their financial health, at a given instance. Furthermore, these systems typically rely on the user to continually update their personal financial data, although some systems allow access to user specific online data. As a result, these systems are merely data-driven calculators that are incapable of providing the user with meaningful financial coaching tailored to their financial intentions and expectations.
Similarly, some financial management systems present a static view of the user's financial health. These systems typically require the user to provide the most current financial data relating to their financial assets and liabilities. Consequently, when the user wishes to develop or update his or her financial plan, the user must input their most recent financial information. This problem is further exacerbated by the fact that these systems demand a lot of typing and guessing when the user enters financial data. This process is time-consuming and inefficient and does not promote an intuitive understanding of how complex financial variables interact to produce a sensible financial plan.
Another problem with many existing financial management systems is that the user is typically limited to managing the transactional details of their financial data. In these systems the user is shielded from the planning and deciding aspects of developing their financial plan. Accordingly, the user learns very little from the process and remains heavily dependent on the system to provide an accurate summary of their financial health. These limitations further exacerbate the potential lack of trust inherent within the relationship between the user and the financial management system.
Furthermore, many existing financial management systems merely project a future value of the user's financial portfolio without providing an indication of the likelihood of achieving that value. Thus, the user is left without any real sense of how to compare one financial plan to another. Consequently, these systems fail to foster a deeper understanding of the risks and/or rewards associated with reasoned financial planning. Furthermore, the user is left to his own devices to interpret the projected results of his financial model and thus leaves him dependent on a live advisor to guide him on how to resolve various financial issues.
On the other end, when users consult a financial advisor a major portion of their consultation time is spent on walking a user through setting up a financial plan. Only after the financial plan is set up and analyzed by the financial advisor, can the focus shift to possible problem areas. This process is time consuming, inefficient and very expensive. The same would apply to financial advisors helping customers with setting up an ideal portfolio, consistent with the customer's risk tolerance, investment style and market attitude. Again a great deal of the valuable and expensive advisor time is spent setting up a financial profile for the customer, whereas he should be focusing on specific recommendations to achieve specific user goals.
Currently, no web-enabled system exists that dynamically incorporates all of the user's financial assets and liabilities into an integrated summary of their health. Individuals do not want to focus on the transactional details of their financial information. Instead, individuals desire to assume an executive decision-making role in managing their financial life. A financial management system is needed where the user is provided with an integrated summary of their financial health and is given personalized financial coaching tailored to their financial goals and intentions. Furthermore, since automated coaching cannot completely replace a live advisor's expertise, experience and innovation in devising specific solutions to the user's problems, access to both automated and live coaching is desirable. However, live advising may be an expensive option due to the under-use of enabling technologies and the relative unavailability of economies of scale. Thus the use of a live advisor may only be feasible for individuals with high net worth and large portfolios. Furthermore, a live advisor is not available twenty four hours a day. No existing web-based system has combined the cost savings of an automated coaching with the expertise of a live advisor, promoting an inexpensive comprehensive financial modeling and counseling tool.